Posted on 09/14/2010 1:44:53 PM PDT by bruinbirdman
A State Council think-tank in China has warned Washington that the US will come off worst in a trade war if it imposes sanctions against Beijing over the two nations' currency spat.
Ding Yifan, a policy guru at the Development Research Centre, said China could respond by selling holdings of US debt, estimated at over $1.5 trillion (£963bn). This would trigger a rise in US interest rates. His comments at a forum in Beijing follow a string of remarks by Chinese officials questioning US credit-worthiness and the reliability of the dollar.
China's authorities seem split over how to respond to moves on Capitol Hill for legislation to punish Beijing for holding down the yuan. The central bank has ruled out use of its "nuclear weapon", insisting that it would not exploit its $2.45 trillion of foreign reserves for political purposes. "The US Treasury market is a very important market for China," it said.
However, the mood is hardening on both sides of the Pacific. The dispute risks escalating if China's trade surplus with the US climbs further and more US jobs are lost. US Treasury Secretary Tim Geithner, who has taken a softly-softly line in the past, said on Friday that China had done "very little" to correct the undervaluation of the yuan since ending the dollar peg in June.
Mr Ding reflects thinking among some in the Poltiburo, who seem convinced that the US is in decline and that China's rise as an exporter of goods and capital give it the upper hand.
"They are utterly wrong," said Gabriel Stein from Lombard Street Research. "The lesson of the 1930s is that surplus countries with structurally weak domestic demand come off worst in a trade war."
He described the implicit threat to sell Treasuries as "empty
(Excerpt) Read more at telegraph.co.uk ...
Great news - we can keep spending!
China can’t afford to cut the branch on which it is sitting. A better target for an economic war would be India. It is India that is stealing our jobs, not China. I’ve just picked up at a street fair a couple of table coasters advertising a local bank and manufactured in China. From “recycled materials” they say in bold print. Recycled? Who knows, who controls? Such phrases make the stupid Americans, me and you, feel good about “saving the planet”. But that’s all right, if we don’t want to manufacture drink coasters, let the Chinese do it. India is another song altogether. We do want and need those computer programming, customer service jobs they are taking from us. (Speaking from experience.) The coasters are exported throughout the world, the Indian jobs typically serve only the American mainland, replace the jobs Americans want, and that’s a crime, if you axe me. Bomb Bollywood!
That is a true and somewhat frightening video; thank you for posting it.
If anyone missed it, here’s the link: http://www.youtube.com/watch?v=Cd-SLRyuRq0&feature=player_embedded
>Yes, but we have tens of millions of useless people who can’t, or won’t be retrained. They need to go away — die or something — instead of voting, or rioting and whatnot.
Bring on the Second Civil War!! ;)
A lot of Walmart’s food is American. Not sure what percentage of Walmart’s sales are food.
Oh, you mean how well do American factory goods sell in a Walmart? Don’t know, haven’t seen them.
You are both part right. If we would deregulate our economy, so that it doesn’t take an Imamal dispensation to open a factory, and so that builders can build where people want to live, and so that environmental cases don’t get $500,000 to “study” how politically connected a businessman is, prices here could drop 10-20%.
That wouldn’t be enough to bring all the jobs back home, but it should be enough to bring back, say, 3 million jobs, at the expense of 200,000 environmental case jobs. Win-win.
Thank you! I will seek out quality American products for those things I buy, especially food (I’m buying from producers close to home, within driving distance), clothing (All American Clothing, just got three pairs of denims...love them) and vehicles (Jeep and Harley). And, they are extremely reliable, cool and capable rides.
Friedman might say (perhaps) not to do this, not to go to these lengths. I think the difference is I really love the items I am getting, and they are made close to home.
I enjoy the philosophies I’m exploring here, and will continue to do so, regardless of what the “don’t buy American” folks say. If something unique and great is made in England, Thailand, Peru, etc..., I’ll buy it if I want it. But my focus is closer and closer, and to be more independent and self-reliant.
ok...but might be good to keep in mind non-the-less.
Indirectly...yes...Think about how many companies they already own and are invested in here. If they have the land they can build more.
Indirectly...yes...Think about how many companies they already own and are invested in here. If they have the land they can build more.
http://www.newswithviews.com/brownfield/brownfield59.htm
(See, World Conservation Bank)
It’s entirely possible US Federal lands were put up as collateral for Chinese (or other countries) loans.
If you’re up to snuff on this, you are aware of the push to create more and more federal lands, taking them out of the public rhelm.
This is nothing new. The UN established this back in the 80s.
Right after you send me your resume and three personal references.
Thank you wolfcreek,....your correct this has been going on since the 80’s.... But If I remember right, and I think that I do, Hillary and Geitners trip to China was to barter with US Land because China had said “no more loans”. They had already been to China shortly before that trip. So it raised some flags why they were going. I do wish I could rememeber where I read this...
There is other news even today, as I gleaned thru the net, where people are fighting for the land the Gov. has taken and or in process of. So the 80’s drive by the Gov. does continue.
In this particular case, I believe a trade war would actually benefit the US more. And to a lesser degree China. Seldom, if ever, does a trade war result in a complete cut off of trade.
The US government is so in debt to their own citizens, she needs to bring back some labor intensive industries. This in turn, would force China to take on a greater burden of industries at the higher end and push the US to relinquish more high tech work, or more specifically, technology driven work.
So personally, I don't believe China has anything to fear from a trade war with the US. Because, once again, a trade war seldom results in a complete cut off of trade.
The US shipping off labor jobs and keeping technology jobs causes an imbalance in wealth amongst her own citizens. The government indirectly responds by going into debt and borrowing from the rich to pay or give jobs to the poor. Hence, the $1.3 trillion/yr of government debt that is accumulating.
So, for these reasons, I believe neither side really fears a trade war.
I feel the same pain; our disagreement is about a different point: the policies you advocate have been tried before and known to produce even more unemployment. They may help a specific industry or two, and only temporarily so, while making more poor the entire country. In sum, they are both ineffective and unfair.
To make the fairness point more explicit, suppose roofers of a particular county are protected by tariffs. How is that fair that you must pay more for the roof while nor benefiting from any greater salary at your own job? Why is the roofer more special than you? You should be able to hirer a roofer from an adjacent county if he offers a lower price and spend the savings on your children rather than the more expensive, protected roofer. As you can see, such policies, while well-intentioned, give privilege to some workers at the expense of your own family, charities that you choose to support, etc. --- everything that is dear to you? Hardly fair: you are an American just like anybody else.
As for impracticality, the policies have always resulted in stagnation of the industry they were designed to protect. Those industries die eventually anyway, but after wasting considerable resources of a nation on the protected few. Think of Detroit, were workers for decades could retire at 48 with a pension equal to 95% of the last salary and full health benefits for life. That added $1500 to every car sold in America --- paid by you and me, patriotic Americans. Why? That was not fair at all. And has it saved the industry? Not at all. The reason Detroit is functioning again is that those same protections (benefits) were smashed when the gov took over.
That's where good intentions lead when they are unsupported by careful analysis and courage of facing reality as it is.
All of our jobs. You are making a mistake of focusing on the product. Evey singe firm saves on materials that go into production ---even if pens and other office supplies. Your firm (school) buys electricity from a company that also saves from materials purchased abroad, so you pay less for that electricity. You may want to read up on these issues: just like physics or engineering, you can't learn economics and management merely by observation.
"And if someone opened a factory, she could easily get a job there with her skills."
No she could not. You arrive at logical conclusions but star from incomplete or incorrect data. Skills provide a benefit for the employer but there are costs as well: her salary. One of the reasons we outsource so many jobs is that those that we demand salaries that don't justify our keep (the more recent one is the increased health care costs as well). That is the sole reason no TV set has been produced in America for decades: the skills are their but too costly. These high salaries make products (TVs) expensive and not competitive; since producers can't sell them, they don't produce them.
"So I see NO downside other then a short period of adjustment."
Well, if you look at the engine of your car, you will see NO reason it should work either. As I said earlier, read up on economics.
You couldn't afford to hire me anyways.
I'm calling BS on your productive Teamsters story. The Teamsters I've seen are far more adept at wielding baseball bats than MIG torches.
Though I doubt your industrial knowledge and experience, you are correct in that people have a nostalgic misbelief that manufacturing is somehow a dirty and dingy occupation. Here a picture of part of our machine shop operation. The guys who work here are nonunion (of course), motivated and well paid. Each makes more than his college educated peers. I find humor in those that say we are in an information economy and manufacturing is obsolete. These guys spend most of their days handling information. The machinery handles the parts.
As for Economics, I take it you mean the brilliant minds that think the bank bailout was a brilliant idea, and that the stimulus worked.
I'm calling BS on your productive Teamsters story.
A difference of a few million pounds of steel per month adds up quickly, although you probably wouldn't get a scratch if I dropped it on your head.
Our country was a different country in 1929 then it is now. Back then we were the net producers, turning out goods from our factories, and did not have enough of a population to use what we produced.
Do you think that is still the case?
Look at the piles of overseas crap in Walmart. PILES of it, a lot of which could be made here. Sure, it would cost little more, SO WHAT! look at the costs in unemployment, in cultural change from people buying just plain crap, and not knowing the difference.
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